Waters, a California Democrat first elected in 1990, won’t give them an easy out. As soon as Frank made his retirement official, Waters began calling Pelosi and other Democrats on Financial Services to tell them she intended to seek the top Democratic post on the panel in the next Congress, according to Democratic insiders.

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“As the next most senior member of the committee, the current ranking member on the Capital Markets Subcommittee and the former chairwoman of the Housing and Community Opportunity Subcommittee, I hope to use my experience to continue and expand his work in the committee,” said Waters in a statement on Frank’s retirement. “I will continue to champion practical regulations, while making sure they work for consumers and the financial sector, a sector which has the right to be profitable but the obligation to be fair, two concepts which are not mutually exclusive.”

Waters, 73, did not directly address the question on succession on the Financial Services Committee in her statement.

But Waters faces serious problems on the ethics front before rising to that new post. She was charged by the Ethics Committee in 2010 with three ethics violations related, at least in part, to her role on the committee. Now she’s looking to become the top Democrat overseeing Wall Street and the banking industry — and the heir apparent to the committee’s chairmanship if Democrats ever win control of the House.

In September 2008, Waters called then-Treasury Secretary Hank Paulson to set up a meeting between top Treasury Department officials and the officers of minority-owned OneUnited Bank. Waters’s husband had been a member of the bank’s board of directors and still owned roughly $350,000 in bank stock. OneUnited was seeking federal help because of its heavy investment in Fannie Mae and Freddie Mac, both of which had been placed in conservatorship due to the collapse of the U.S. housing market.

During that meeting, Kevin Cohee, OneUnited’s CEO, asked for $50 million in financial help from Treasury, a request the department denied. Mikael Moore, Waters’s chief of staff and grandson, attended that meeting.

But OneUnited, after getting new capital from another bank, later received $12 million in funding from the Troubled Asset Relief Program.

After news reports on Waters’s involvement with OneUnited’s federal bailout broke, an ethics investigation into the California Democrat was initiated. In June 2010, Waters was hit with three ethics charges accusing her of violating the letter and spirit of House rules and federal regulations by assisting OneUnited, including using her official position to benefit her personal finances.

Waters has vehemently denied the allegations and asked for an ethics trial to clear her name.

But those proceedings were postponed in mid-Nov. 2010. The Ethics Committee said the delay was due to new evidence uncovered during the probe, but POLITICO later reported that two Ethics Committee staffers helping run the Waters case were suspended after allegations they improperly communicated with Republicans, including its current chairman, Alabama Rep. Jo Bonner, on the secretive panel.

In July, following POLITICO’s report — which included internal emails and documents showing the level of partisan dysfunction within the Ethics Committee — an outside counsel, Billy Martin, was appointed to take over the case. Martin’s deadline for reporting back to the Ethics Committee with his recommendations is Jan. 2.

Waters’s attorneys have asked for the charges against her to be dismissed, but it is not clear whether that will happen, meaning the California Democrat could go into 2012 facing a potential ethics trial while seeking the top Democratic spot on Financial Services.